Australian dollar (AUD) slides as risk appetite slumps
The Australian dollar (AUD) stumbled at the end of last week, with a cautious shift in market sentiment souring investors on the risk-sensitive currency.
The mood turned increasingly gloomy through Friday’s European session amid reports that the Trump administration was drawing up plans to seize Iran’s main oil export hub, Kharg Island.
In the absence of any notable domestic data, the ‘Aussie’ will likely remain sensitive to market risk dynamics today, with global inflation concerns and events in the Middle East potentially weighing on AUD.
New Zealand dollar (NZD) pressured by downbeat trade
The New Zealand dollar (NZD) also faced selling pressure on Friday as skittish investors shunned risk-sensitive assets.
A lull in NZD data is likely to leave the ‘kiwi’ driven by wider market trends at the start of this week, with a cautious mood potentially dragging on the currency.
Pound (GBP) pressured by jump in UK borrowing costs
The pound (GBP) faced notable selling pressure at the end of last week’s session amid turmoil in the UK bond market.
10-year bond yields surged on Friday, striking their highest levels since 2008 amid UK inflation risks and expectations of up to three interest rate hikes from the Bank of England (BoE) this year.
Movement in the pound may be limited today, as GBP investors brace for a series of high-impact UK economic releases later in the week.
Euro (EUR) buoyed by ECB rate hike speculation
The euro (EUR) rallied against most of its peers on Friday, following a Bloomberg report suggesting that the European Central Bank (ECB) may consider a rate hike in April if inflation rises too sharply in March.
However, the single currency’s gains were ultimately capped by its strong negative correlation with the US dollar (USD).
Coming up, the release of the Eurozone’s latest consumer confidence index is likely to put pressure on the euro today, as the war in the Middle East is expected to spark a fresh decline in morale.
US dollar (USD) firms amid fresh escalation of Middle East tensions
The US dollar strengthened at the end of last week amid renewed safe-haven demand amid reports the US is preparing to send more troops to the Middle East.
The deployment of thousands of additional Marines to the region appeared to lend credence to reports that the Trump administration is considering plans to occupy Iran’s Kharg Island to cut off oil revenue for Tehran.
Expect USD exchange rates to remain sensitive to developments in the Middle East at the start of this week, with any further escalation of tensions potentially boosting the US dollar’s safe-haven appeal.
Canadian dollar (CAD) Underpinned by upbeat retail sales data
The Canadian dollar (CAD) edged higher on Friday, supported by a surprisingly strong domestic retail sales print in February.
Looking ahead, the ‘loonie’ may get off to a volatile start this week as a lull in domestic data will likely leave movement in the commodity-linked currency tied to oil price dynamics.
Data Releases
01:00 EUR Consumer Confidence (Mar)